Inflation sparks India-Pakistan onion struggle

Indian workers unload sacks of onions from trucks that arrived from Pakistan. Pic: AP.

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NEW DELHI (AP) — India is urging Pakistan to resume onion exports to help ease the strain of rocketing food prices, the foreign minister said Friday.

Prices for onions, a diet staple in South Asia, have nearly doubled in recent weeks in India, after unseasonable rains damaged the onion and garlic crops in the western state of Maharashtra. Prices for milk, fruit and fish have also shot up.

Overall, food inflation hit its highest level in a year last month at 18.32 percent, compounding the hardships of India’s hundreds of millions living in poverty.

Pakistan, struggling with its own food inflation, ordered a ban on land shipments of onions to India on Wednesday as 300 trucks carrying 3,000 tons of onions were on their way across the border.

News of Pakistan’s ban led onion traders to raise prices further, hitting 60-65 rupees per kilogram ($1.30-1.43 per kilogram, or $0.59-.64 a pound) in cities such as Delhi, Chennai and Mumbai. Two months ago, a kilogram of onions cost around 30 rupees ($0.66 per kilogram, or $0.29 per pound) in Delhi.

India’s foreign minister, S. M. Krishna, told reporters the government was in talks with Pakistan to resume shipments. On Thursday, Commerce Secretary Rahul Khullar said he had secured a deal for Pakistani onions to be sent by sea, but he did not say when they might arrive at the port in the western state of Gujarat.

Indian workers unload sacks of onions from trucks that arrived from Pakistan. Pic: AP.

Officials at Pakistan’s Commerce Ministry could not immediately be reached for comment.

Meanwhile, Indian tax agents on Friday raided wholesale onion dealers across the northern state of Uttar Pradesh to investigate claims of cartel pricing.

The local traders said they were being unnecessarily harassed and had nothing to do with the cost elevation.

Food prices have been rising across the globe due to unpredictable weather — including extreme cold, floods in India and Australia and drought in South America — as well as fiscal actions amid the global economic downturn.

In December, global food prices hit their highest levels since 1990, according to the U.N.’s Food and Agriculture Organization. The agency’s Food Price Index reached 214.7 last month, a 4 percent increase from the previous month after six months of increases. The index tracks a basket of commodities including meat, dairy, cereal grains, oils and sugar. The biggest increases for December were for oils, cereals and sugar.